House passes tobacco buyout bill

Supporters called the passage of the tobacco buyout in the U.S. House of Representatives an important step, but note that it faces hurdles before it becomes law.

Two primary issues faced the tobacco buyout bill in the Senate: attaching Food and Drug Administration regulation of cigarettes and tobacco products to the bill and “helping senators understand that farmers have bought quota because the government made that a condition of doing business,” says Blake Brown, North Carolina State University Extension ag economist.

The latter became an issue when the Environmental Working Group released a study showing that large farmers who owned substantial amounts of quota stand to benefit from the buyout.

U.S. Rep. Mike McIntyre, D-N.C., who was widely credited with moving the bill along in the House, called its passage a “red-letter day” and urged the Senate to do the same.

“The Senate legislative offices are ‘cautiously optimistic’ that it can proceed through the Senate,” Brown says.

The bill would pay quota owners and growers $9.6 billion. Quota owners would get $7; growers would receive $3 per pond. The payments would be made over five years and would be based on 2002 quota.

The tobacco buyout bill was included as a part of a House corporate tax bill to stop retaliatory tariffs by the European Union. The Senate had no parallel legislation, even though many senators favor a buyout linked with FDA regulation. The House bill didn't include FDA regulation.

In the Senate, the tobacco buyout bill faced the risk of being scuttled. “If there's a lot of resistance to FDA in the Senate, it could cause the buyout to be stripped out of the bill,” Brown says.

As little as a week after the House passed the bill, some in the Senate were saying the tobacco buyout was emerging as a big obstacle to the passage of the corporate tax bill.

Also on the heels of the passage of the tobacco buyout bill in the House: A new Environmental Working Group study suggests the top 10 percent of people and companies eligible for compensation would get more than two-thirds of the $9.6 billion.

The EWG, which created a stir in the lead-up to the new farm bill by publishing lists of farmers who receive USDA price support, said 80 percent would receive annual payments of $5,389. EWG claims that the top 1 percent of quota holders would get 27 percent of the money.

North Carolina Farm Bureau president Larry Wooten called the report an attempt to derail the legislation. He pointed out in published reports that the buyout is based on quota.

“If you acquired more tobacco quota through the sweat of your brow,” he told the Associated Press, “then you're entitled to more of this buyout money.”

The president of the Kentucky Farm Bureau likened it to owning stock in a company. “The ones who own the most stock are going to get the most payments.”